From future business objectives, product launch, vendor payment, to marketing campaigns and recruiting more employees, small business owners and entrepreneurs have a lot of things to manage. They may also need to get loans to keep business operations running smoothly. Even debt is an essential part of keeping businesses running. But it can be overwhelming if there is no proper debt repayment strategy.
Creating a Debt-Reduction & Repayment Plan
Small businesses can use different debt reduction and repayment strategies to get out of debt and enjoy a better cash flow. It is always advisable to pay off business debt as faster as possible to increase revenues and the bottom line. Below are some tips for creating a debt reduction and repayment plan to achieve your business goals effectively.
Create a workable business budget and stick to it
If your last year’s business budget did not work well, figure out the flaws and create a new workable budget plan to improve the financial health of your business. Assess all your current business debts and set monthly payments for them to get out of debt as soon as possible. Along with creating a budget plan, implement a timeline to set deadlines for paying the amount down effectively. Creating a budget plan, saving strategy and a debt repayment timeline helps you gain better control over things to improve business finances and eliminate debt as well.
Find ways to increase business income
Maximizing cash flow is one of the best ways to pay off business debt faster. For this purpose, you will need to find ways to increase income. A steady inflow of cash will help you pay down business loans. So, find out ways to increase revenues and generate more income to minimize the load on your business. Identifying and paying off a debt with a high-interest rate is always a great idea to save some bucks while eliminating it. List them down with a high-interest rate to lower and start paying them off while considering new ideas to increase cash flow.
Get a balance transfer credit card
Balance transfer credit cards are designed to help individuals and businesses move their balances of high-interest credit cards to a new card with a relatively lower or 0% introductory interest rate. Transferring balance is one of the best ways to consolidate and repay business debt as faster as possible while saving a lot of bucks in terms of paying no interest. Balance transfer credit cards usually come with a 0% introductory APR for a particular period of time up to 21 months. A business can move its current balances to a new card with the intention to combine debts and pay them off without paying interest. However, the transferred balance should be paid before the promotional APR period ends. Otherwise, you will be charged with a higher interest rate than your current card’s rate.
Put payments on autopilot
Thanks to payment automation tools and apps, you can put monthly outstanding payments on autopilot to get them paid without missing a single one. Assess your debt payment terms and set automatic payments from your business account. This will deduct monthly debt payment from your account and pay it towards a particular debt account on a given date & time. Automatic payments also help you keep accountable to set budget plans and meet deadlines.
Consider professional options
If the above-mentioned tips for paying off business money don’t work well for you, go ahead and consider other professional management and repayment options available. You can find out credit counseling agencies and unions that specialize in business debt management to get professional help. As a business owner, you can also apply for a business outstanding payment consolidation loan, management plan, or settlement program to pay down in the best way possible. Find out a lender and ask if they will turn your business debts into one long-term package with a lower interest rate. This will give you more time to get out of outstanding payment while paying a little amount toward the interest rate.
Getting out of business debt successfully
Attacking your business debt as soon as possible is the best way to break away. Just build a workable business repayment plan, and utilize all the available options out there to pay down debt and save bucks on the interest rates.